Money Through The Generations

Kids want financial advice from grandparents

by Joseph Coughlin, Ph.D.

Mr. Coughlin is Director of the Massachusetts Institute of Technology AgeLab. His research provides insights on how demographic change, technology, social trends and consumer behavior will converge to drive future innovations in business and government. Connect via Twitter: @josephcoughlin. Visit

The parents of Baby Boomers sometimes learned the hard way that their opinions and advice were not always welcome. But in an ironic generational twist, the children of Baby Boomers are proving more inclined to turn to their grandparents for advice – at least when it comes to learning about managing money and saving for the future.

It might seem a little counterintuitive that the Millennial generation – raised in the fast-paced world of the Internet, mobile devices and social media – would be willing to sit down and accept financial advice from grandparents. But it turns out that they are – by a startlingly wide margin. Yet very few grandparents talk to their grandchildren frequently about money and the importance of saving.

According to the TIAA-CREF Intergenerational Study of 1,000 grandparents and about 1,000 grandkids aged 17-24, conducted in collaboration with MIT’s AgeLab, 85 percent of young adults say they are open to talking with grandparents about money and saving. However, only 8 percent of grandparents say they are likely to start a conversation with their grandchildren about money and saving for college.
Currently, grandparents do not feel particularly responsible for helping to teach their grandchildren about money and savings. Sixty percent feel at least somewhat responsible, but the other 40 percent say they are not responsible at all. Less than 20 percent say they are extremely or very involved.

While there are many factors that appear to impact the likelihood of grandparents talking to their grandchildren about money and savings and being involved in teaching them (such as the frequency of visits and physical proximity, among many others), at the very least, this data suggest grandparents may be underestimating the openness of their grandchildren to have this conversation and could possibly be missing out on an opportunity to influence their grandchildren’s savings habits.

Grandkids recognize good saving when they see it

It actually makes perfect sense that Millennials would turn to grandparents for this kind of advice since they can see what their grandparents have achieved after a lifetime of saving. Nearly six in ten (59%) say their grandparents are excellent or very good savers. This at a time when 97 percent of young people surveyed are anxious about their own college savings and future financial independence.

The bottom line is that grandparents can have a much greater influence on their grandchildren’s money habits than they realize by sharing stories about how their financial decisions – for better or worse – have affected their lives. Only 30 percent of the grandparents surveyed think they can influence their grandchildren’s money habits, and only 5 percent feel they have a great deal of influence. Yet 73 percent of the young adults surveyed said their grandparents do influence their saving and spending habits to some degree. One in five grandchildren (22%) says their grandparents have a great deal of influence on their savings habits.

Given that grandparents believe they are generally superior savers compared to their children and grandchildren, more of them should consider reaching out to grandchildren to help instill good saving and money management habits. Over half of grandparents (53%) say they are excellent or very good savers, but only 30 percent say their children are excellent or very good savers, and just one in five (21%), say their grandchildren are excellent or very good savers. In fact, about four in ten (38%) say their children are fair or poor savers, and nearly half (46%) say their grandchildren are fair or poor savers.

The Art of Storytelling

Twenty percent of grandparents think a four-year education costs $30,000 to $50,000 and 26 percent think it costs $50,000 to $75,000. That is far off the mark

If grandparents decide to initiate a conversation about money and savings, it’s best to keep the conversation light–stick to storytelling and use terms such as “this is what I might do” or “this is what I did” in a particular situation, and avoid being too rigidly prescriptive or opinionated. Frame financial lessons through personal stories and anecdotes, which have the potential to resonate more with today’s grandkids, rather than lectures. Also, grandparents don’t want to step on the toes of their children, so they need to make sure parents are comfortable with the discussion. The earlier this conversation can begin the better for the Millennials–and even younger grandkids. When you empower children to understand financial decisions, they develop a lifelong sense of confidence and trust in themselves, helping them become successful adults.

This confidence is critical because the Millennials do face some formidable financial challenges–most notably the skyrocketing cost of a four-year college degree. Young adults surveyed are very concerned about saving for higher education–or paying off the debt they have accrued. Thirty percent indicate they have nothing saved for college, and most feel unprepared financially. Grandparents, meanwhile, generally underestimate the mountain of college costs that their grandchildren must climb.

Twenty percent of grandparents think a four-year education costs $30,000 to $50,000 and 26 percent think it costs $50,000 to $75,000. That is far off the mark. A moderate, in-state public four-year college education costs approximately $100,000. A moderate private four-year college education now averages around $164,000.

Our focus groups for the Intergenerational Study found that grandparents are somewhat willing to help grandchildren financially. About one-fourth of grandparents (23%) say they plan to help pay for their grandchildren’s post high school education. And about three in ten grandchildren say they get help from their grandparents for post-secondary education expenses.

Among those grandparents who say they are helping, most (59%) say they are contributing money to tuition or other college expenses like room and board and books. About half say they plan to contribute less than $5,000 to their grandchildren’s post high-school education, with two-thirds saying they will contribute less than $10,000. One-fourth of grandparents say this money will come from a personal savings account, while only about one in 10 grandparents plan to use a 529 savings plan or another investment or savings account specifically set up to fund post-secondary education.

But even grandparents inclined to help financially with an education want some assurance that their grandchildren are serious about their own education by paying for at least part of it. In other words, grandkids need to have some ‘skin in the game.’ To ensure this occurs, a grandparent could offer their grandchild a “match” program, contributing a dollar to a 529 account for every dollar the grandchild saves. Of course, grandparents must always take care not to jeopardize their own retirement savings. Among all grandparents of this 18 to 24 year old group, the most common barrier to helping grandchildren pay for college is a lack of additional income to help, with six in ten (58%) citing this as a barrier. Another one-fourth (24%) say it is challenging to divide any available money among many grandchildren.

To help grandparents and grandchildren ease into conversations about money and saving, TIAA-CREF recently introduced a variety of tools and resources to help break the ice, including conversation tips and worksheets, templates for electronic incentives and reward certificates, as well as a dedicated website with informational resources. Remember, one of the big takeaways from the TIAA-CREF Intergenerational Study is grandparents don’t need to write a check to influence their grandchildren’s saving and spending habits. But they do need to start the conversation and share their stories. v





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